Going to school on presidential politics

As an adviser in Barack Obama's campaign, U. of C. economics professor Austan Goolsbee finds himself caught in the NAFTA crossfire

March 09, 2008|By David Greising, TRIBUNE CORRESPONDENT

When precocious 3rd grader Austan Goolsbee noticed that pencils were in short supply at school, he got his dad to front him money to buy a bulk package, then sold individual Ticonderogas to fellow 3rd graders at a profit.

That was the first successful experiment in microeconomics for someone who has become a star professor at the University of Chicago's Graduate School of Business. As an economist, Goolsbee has questioned whether tax cuts really motivate the super rich and shown how Internet price-shopping prompts insurance companies to lower their premiums.

Goolsbee's first foray into national presidential politics, as an economics adviser to Barack Obama, has not gone nearly so well.

Goolsbee got caught in political crossfire after a memo was leaked indicating that in a visit to the Canadian consulate in Chicago, Goolsbee implied that Obama is not sincere in his recent criticism of the NAFTA treaty.

The debate over what Goolsbee did or did not say, and what Obama does or does not mean in criticizing the North American Free Trade Agreement, has become the sort of tempest that can briefly consume a presidential campaign.

Obama's campaign has claimed Goolsbee's comments, as reported in a memo by a consular official, were badly and perhaps purposely misinterpreted. And liberal Canadian politicians have accused Conservative prime minister Stephen Harper of orchestrating the entire affair as part of an effort to damage Obama.

Goolsbee's off-message misadventure got extra legs late last week. Obama foreign policy adviser Samantha Power, a Harvard University professor, resigned from the campaign after she told a Scottish newspaper that Hillary Clinton is "a monster." Coming on top of the Goolsbee affair, it was a second high-profile misstep by a member of Obama's kitchen cabinet of professor-advisers.

"Folks who haven't been through this process before just don't know how tough it can be," said Heather Higginbottom, policy adviser to Obama's campaign, who served as deputy policy adviser in John Kerry's 2004 presidential run.

Goolsbee has kept a low profile in the two weeks since his Canadian misadventure first became news, and he did not respond to repeated requests for comment.

"It's very frustrating for him, because he says everything that's being said about what he said is all very false," said his mother, Jane Goolsbee. "It's very, very frustrating."

To those who know Goolsbee, 38, it is surprising to see the spotlight shine unfavorably on him. Until now, he has always gleamed when the bright lights came on.

While at Yale he won national contests in extemporaneous speaking and debate and even competed internationally. His improvisational college comedy troupe, "Just Add Water," toured nationally and appeared on Second City's Etc. stage.

At the Massachusetts Institute of Technology, where he earned his PhD, his former academic adviser remembers him as a standout.

"There was no doubt from the first day that this was a student with remarkable talent," said MIT economist James Poterba, who today works alongside his former doctoral candidate as members of the National Bureau of Economic Research.

Popular professor

At the U. of C. Goolsbee is a popular professor, known for a free-flowing wit and a powerful intellect that challenges students without intimidating them. He also is a featured performer in the B-school's annual satirical "Follies" program.

The U. of C. business school is known as longtime home to "Chicago School" economics, which extols free-market ideas. Goolsbee is part of a new wave of thinking at Chicago generally called "new social economics," which argues that social factors have some influence on economic decisions.

U. of C. professor Steven Levitt, who took microeconomics into the mainstream with his playfully original best seller "Freakonomics," said he, Goolsbee and others apply a basic technique. They focus on human activity in natural settings and find economic explanations for how people behave.

"We look for data, and we look for natural experiments -- ways in which you can trick everyday data into telling you the answer to questions that are hard to solve if you just sit there and think about it," Levitt said.

Levitt and Goolsbee studied at MIT together, and they applied such data-driven logic to be winners in the university's fantasy baseball league, teaming to beat some of the world's best number crunchers two years in a row.

Ironically, one of Goolsbee's best-known academic papers targets the use of "natural experiments." In it, he claims that improper interpretation of real-world data by Martin Feldstein and other economists may have led them to a false conclusion that tax cuts for the rich actually can increase the government's tax revenues.

"That's a debate that Goolsbee won," said Levitt. The Goolsbee paper has changed the way economists, even those who disagree with Goolsbee, examine the way that very wealthy people respond to tax cuts, he said.